Dividing the legacy of the encryption empire, the FTX liquidation team's "Business Secrets of Destruction"

On July 4, 2025, Sunil, a representative of FTX creditors, posted a screenshot of a document regarding FTX's bankruptcy liquidation on a social platform, which showed that FTX would seek legal advice and that if users belong to restricted foreign jurisdictions, their claim funds might be confiscated.

Sunil also announced a piece of data: among the claim funds from "restricted countries", 82% comes from Chinese users.

However, because encrypted trading is not allowed in the country, these users may be classified as "illegal," resulting in the confiscation of their compensation eligibility. This means that these users not only cannot recover their losses, but their assets may also be "legally confiscated."

The community is in an uproar, questioning the compliance reasons of the liquidation team, which are merely excuses to shirk responsibility. Some have referred to FTX's decision as "American-style robbery," lamenting that "our people are not as good as dogs," with deep disappointment and helplessness evident in their words. Some believe that despite China's strict restrictions on cryptocurrency trading, user funds should not be directly confiscated, and that FTX's decision lacks clear legal basis.

After such a statement that could rewrite the global creditors' rights perception, what the outside world is most concerned about is not just whether FTX is "acting in accordance with the law," but who is making the decisions, based on what standards they are acting, and who the ultimate beneficiaries are.

Who is the person taking over?

The team taking over this ruin is a bankruptcy restructuring team from Wall Street: led by restructuring veteran John J. Ray III as CEO, and formed by the veteran law firm Sullivan & Cromwell (hereinafter referred to as S&C), which has been assembled as the liquidation team.

John J. Ray, a veteran in the business of handling corporate corpses. He took over the Enron bankruptcy case, bringing nearly $700 million in revenue to S&C during that "trial of the century."

This time, he brought the same law firm team to take over FTX.

High salary is not the issue; the question is how high it is. According to public documents, the hourly rate for S&C partners can reach as high as $2000, while John Ray himself charges $1300 per hour. According to data disclosed by Bloomberg, as of early 2025, the total legal service fees claimed by S&C in the FTX Chapter 11 bankruptcy proceedings have reached $249 million.

The assets that should belong to all creditors are being sliced away by a "professional team". This is also why FTX creditors have been accusing: "They are repeating the Enron script."

Additionally, it is paradoxical how quickly FTX announced its bankruptcy. It wasn't until the complete draft of SBF's testimony was exposed that we learned how he was "hunted" just two days before the bankruptcy filing.

A draft of testimony prepared by SBF (Sam Bankman-Fried) for submission to Congress shows that Ryne Miller, the General Counsel of FTX.US and also from S&C, had closely worked with the liquidation team to force SBF and his management team to quickly move towards Chapter 11 bankruptcy proceedings.

SBF wrote in his testimony: "The people from Sullivan & Cromwell and Ryne Miller sent me a lot of threats, they even harassed my friends and family... Someone came to me crying."

But he no longer has a chance to turn back. The five emails he sent were never replied to by John Ray.

He is just the previous protagonist in this exquisite plunder.

The bankruptcy filing was made in the midst of overnight bombings, panic, and isolation. He had intended to continue fundraising and attempt to save the situation, but was prematurely kicked off the stage by the legal advisor he had hired.

But the real game—about who takes over this company, who gets its legacy—has just begun.

Who is Dividing FTX's Legacy?

The way this bankruptcy liquidation team is handling the disposal of the historical portfolio of FTX is infuriating and baffling.

These portfolios were important pieces in SBF's layout of the "effective altruism" dream, and at one point were considered valuable reserves for FTX's resurgence. However, they were almost "liquidated" en masse by John Ray's team, with most selling prices far below their true value.

The three most glaring transactions are enough to glimpse the absurdity of the entire liquidation:

1) Cursor: $200,000 bought a sigh of $500 million

Cursor, dubbed by AI as the "Vibe coding神器", received a seed investment of $200,000 from FTX, and was sold at its original price during liquidation. On the surface, it seems like there was no loss, but considering that Cursor has been reported by authoritative media such as TechCrunch and Bloomberg with a valuation as high as $9 billion, this selling price is indeed outrageous.

According to conservative estimates, FTX could have recovered at least $500 million in equity gains, but due to the actions of the legal team, they handed it over. There was even a sarcastic remark within the industry that it was "faster to make money than Trump," directly pointing to how this asset was sold off in a "particularly shady" manner.

2) Mysten Labs / SUI: Sold a $96 million dream for a $4.6 billion public chain

Mysten Labs and its developed SUI chain is considered the next Solana, possessing extremely high public chain scalability.

FTX acquired equity in Mysten and subscription rights for 890 million SUI tokens for about 100 million USD in 2022, but the liquidation team handled this asset for 96 million USD in 2023, citing "rapid capital recovery."

At its peak, the value of this batch of SUI once exceeded 4.6 billion USD, which means that the 96 million USD at that time only accounted for 2% of its future value.

The community once joked that if SBF saw the market for SUI in prison, he would probably be so angry that he would spit blood.

3) Anthropic: $1.3 billion to sell off a $61.5 billion giant

Anthropic, founded by former OpenAI executives, focuses on AI safety, with SBF personally investing $500 million for approximately 8% equity.

The liquidation team sold all equity in two installments in 2024, totaling 1.3 billion dollars. Initially, outsiders thought it was a decent liquidation achievement, but less than a year later, Anthropic's valuation soared to 61.5 billion dollars. Based on this calculation, the value of FTX's 8% stake is close to 5 billion dollars.

That is to say, the bankruptcy liquidation team missed at least $3.7 billion in additional returns.

FTX's investment vision is correct, and almost no one would deny it. They precisely fired their shots before the windfall came, betting at the moments when these companies were most overlooked, and secured core shares.

But after the FTX collapse, these bets were treated as scrap metal.

In addition to these three typical cases, the FTX liquidation team caused huge controversy by consistently operating to "sell off" LedgerX, Blockfolio, and large packages of SOL tokens.

For example, during the liquidation auction of SOL tokens in 2024, institutions like Galaxy Trading and Pantera Capital bought at low prices, and subsequently, the price of SOL skyrocketed, resulting in astonishing profits while the original creditors could only watch the opportunity slip away. According to reports from the Financial Times, Cointelegraph, and others, FTX is believed to have missed out on at least tens of billions of dollars in potential appreciation in the disposal of quality assets.

Why did this concentrated and short-term "liquidation sell-off" occur? John Ray stated it was to "lock in funds in a timely manner and avoid volatility risks," but industry analysts pointed out that such reasoning cannot explain why the large-scale discounts were only targeted at familiar institutional friends, and many assets doubled in value in less than 6 months.

As a result, conspiracy theories emerged, suggesting that the liquidation team sold all the good assets to familiar funds in a very short time, allowing themselves to collect exorbitant lawyer fees, quickly close the case, and ultimately make a large profit. The assets that originally belonged to the creditors were transferred at a low price to those closer to the center of power under the framework of "reasonable and compliant."

The value of those shares, tokens, and options that were transferred at a low price continues to grow; yet those who were supposed to hold onto this growth can only watch through the publicly disclosed PDF as others seize it in the future.

Bankruptcy Liquidation or "Legal Robbery"?

No industry is better at forgetting than the crypto industry. The market has now fallen back into the chase for AI, stablecoins, and RWAs; the crisis of 2022 seems to have passed, but the liquidation process is far from over.

Over the past three years, FTX's assets have been sliced, packaged, and auctioned off, stripping away all future of a platform, leaving only an empty shell.

The scale and complexity of FTX's bankruptcy liquidation are enough to be recorded in the history of global cryptocurrency, but what is truly worth being written into textbooks is probably the collective disillusionment of creditors with the legal trust system.

On one hand, the legal team of John Ray and S&C has legally charged exorbitant fees, making it almost impossible to be held accountable by the judiciary. On the other hand, they have shielded themselves with indemnity clauses, meaning that even if they are questioned in the future about "malicious liquidation," they will not have to bear responsibility.

For the tens of thousands of retail investors plundered by the FTX collapse, this is not redemption, but a second injury. You may have missed the market, but being deprived of a fair chance to recover is the cruelest part.

Currently, FTX's bankrupt assets are expected to be globally liquidated and distributed for a total of between 14.5 billion and 16.3 billion USD. However, if users from regions like China are ultimately unable to claim successfully, it will mean yet another pending tragedy: some will be completely excluded from the legal system, and the funds that originally belonged to them will be consumed by the complex legal processes and the gray areas of bankruptcy lawyers.

Furthermore, the new plan submitted by the FTX team to the bankruptcy court contains hidden clauses that exempt advisors from liability, making it almost impossible for creditors to sue or file complaints.

For the industry, the collapse of FTX may just be another bottom of a cycle, but for those trapped in it, especially the tens of thousands of retail investors in China, it is not only a loss of funds but also the end of hope.

The group of lawyers and consultants known as the "professional liquidation team" can determine the fate of billions of dollars in assets with just a few lines of text, yet no one is leaving any opportunity for these ordinary investors to make a comeback.